Presentation Doh ohom ome Public lic Com ompany any Limi mited - - PowerPoint PPT Presentation

Company Presentation

Doh

• hom
• me Public

lic Com

• mpany

any Limi mited ted

10 March 2020

Table of Contents

Dohome Business Overview

1

Operating Results for FY2019

2

1

Business Outlook

3

Dohome Business Overview

Dohome Business Overview

As of 31 December 2019 3

One-stop Home Products Destination

Retail Space (226,029 sq.m.) Warehouse Space (255,178 sq.m.)

Branches Sales Team Call Center and Telesales Website

International Suppliers Domestic Suppliers Delivery Service Repair and Maintenance Service Home Installation Service Design Center Special Order

Target Customer Group Home Products Services & Solution

Resellers (Wholesale) Government Agencies and State Enterprise Contractors and Projects End-users (Retail)

Dohome Dohome To Go branches in operation new branches within 2021 branches in operation

10 6 5 85

new branches within 2021

3

Operating Results for FY2019

P&L Summary

FY2018 FY2019 Changes THB mm % THB mm % THB mm % Revenue from sales and services 18,445.4 99.5 17,868.7 99.4

• 576.7
• 3.1

Other incomes 89.8 0.5 103.1 0.6 13.3 14.8 Total revenue 18,535.2 100.0 17,971.8 100.0

• 563.4
• 3.0

COGS 15,760.9 85.0 14,910.7 83.0

• 850.1
• 5.4

Gross profit

(1)

2,684.5 14.6 2,958.0 16.6 273.5 10.2 Selling & Administrative expenses 1,907.0 10.3 1,879.1 10.5

• 27.9
• 1.5

Other expenses 1.4 0.0 26.3 0.2 25.0 1,854.1 EBIT 866.0 4.7 1,155.7 6.4 289.7 33.5 Interest expenses 320.2 1.7 298.0 1.7

• 22.2
• 6.9

Tax expenses 107.0 0.6 132.1 0.7 42.4 39.6 Net income 438.8 2.4 725.5 4.0 269.5 61.4 Depreciation & Amortization 387.9 2.1 407.8 2.3 19.9 5.1 EBITDA 1,253.8 6.8 1,563.4 8.7 309.6 24.7

Note: (1) Gross profit margin calculated based on revenue from sales and services

5

Revenue Breakdown by Product Group

47% 48% 44% 36% 35% 37% 16% 17% 18%

2017 2018 2019

Construction Materials Repair & Maintenance Home Decoration % to revenues from sales and services Key Changes ◼ In term of revenue breakdown by product group, the FY2019’s revenue from construction material dropped 10.5% YoY while other product groups’ revenue showed growth at 2.8% - 5.7% YoY. Thus, revenue contribution from construction material dropped from 48% in 2018 to 44% in 2019. ◼ As a result, product mix shifting towards more contribution to the repair & maintenance and home decoration product group which have higher margin leads to overall Gross Profit Margin slightly improved.

6

18,576 18,445 17,869 4,436 4,325 0.2%

• 0.7%
• 3.1%
• 2.6%
• 2.5%

2017 2018 2019 4Q2018 4Q2019

Annual Revenue from Sales and Services Growth

Revenue from Sales and Services

THB mm Key Changes

◼

FY2019’s total revenue from sales and services was down by 3.1% YoY, which was driven by the decrease in revenues from matured branches due to the slowdown in the country’s economic conditions, competitive landscape in the industry, and the big flooding in Ubon Ratchathani in September 2019 that negatively affected the sales in Ubon Ratchathani branch.

◼

For all the reason above, same store sales growth (1) has been declined at 5.3% in 2019. Moreover, the big flooding also affected the overall same store sales in 3Q2019 to decreased by 8.2% YoY. However, negative same store sales growth solely comes from construction material product group revenue, whereas repair & maintenance and decoration product group revenue sees a positive growth.

◼

Furthermore, revenues from branches in the ramp-up phase continued to increase, especially from Bangna branch which completed its first full-year operation in 2019 and from Phetkasem Branch which opened in November 2019.

Note: (1) same store sales growth is considered only the revenue from branch which completed its full year operation.

Quarter Revenue from Sales and Services

7

Gross Profit and Gross Profit Margin

3,017 2,684 2,958 594 732 16.2% 14.6% 16.6% 13.4% 16.9% 2017 2018 2019 4Q2018 4Q2019

Annual Gross Profit Gross Profit Margin Key Changes Gross Profit Margin increased from 14.6% in 2018 to 16.6% in 2019 due to:

◼

Revenue contribution from house brand expanded from 14.4% in 2018 to 16.0% in 2019 which is in conjunction with the company’s strategy to achieve 20% house brand revenue contribution by 2022

◼

The increase in the gross profit margin of both house brand and non-house brand products

◼

An effectively managing inventory and internal policy results in the reversal of provision for obsolete and slow- moving inventory

◼

An increase in revenue from distribution center which started to cover cost

◼

Higher contribution from repair & maintenance and decoration product group

THB mm / % to revenues from sales and services Quarter Gross Profit

8

High Quality House Brand Products

14.4% 16.0% 14.6% 16.7% 2018 2019 4Q2018 4Q2019

% to revenues from sales and services

Revenue Contribution from House Brand

House Brand Products

◼ The company gives high

importance to product sourcing in order to obtain quality products at competitive prices

◼ The company has a House

Brand development team to help ensure that a variety of product options are available for customers

◼ Conduct research to study

the needs of customers and the competitive landscape in the market in order to

• ptimize product selection

◼ House Brand product

procured only from qualified suppliers, both domestically and internationally

◼ High-quality products

meeting product standards with over 130 certifications issued by Thai Industrial Standard

House Brand Product Examples 9

High Quality House Brand Products

Examples of House Brand Products with Thai Industrial Standards 10

Distribution Center

Distribution Center

◼

Located in Pathum Thani and began operation in June 2018

◼

Total warehouse area of 41,580 sq.m.

◼

Functions:

◼

Receiving inventory

◼

Picking inventory

◼

Dispatching Inventory to customers and branches

◼

Revenue from distribution center started to be higher than cost which would reduce COGS

Receiving Picking Dispatching Suppliers

Cross dock

Store Customers Stores

Inventory Management at the Distribution Center 11

Managing the Slow-Moving Inventory

In 2019, Dohome managed the slow- moving inventory more efficient by launching the promotions and marketing campaigns on the slow moving goods throughout the year and especially in Dohome Fair big sale in December 2019. 12

The Company efficiently managed leasable space both retail and warehouse area to increase rental income.

Increase Other Income by Managing Leasable Space

Retail Area: Bang Bua Thong 13

Increase Other Income by Managing Leasable Space

Retail Area: Chiang Mai 14

Increase Other Income by Managing Leasable Space

Retail Area: Bangna 15

Retail Area: Nakhon Ratchasima

Increase Other Income by Managing Leasable Space

Retail Area: Udon Thani 16

Retail Area: Phetkasem

Increase Other Income by Managing Leasable Space

17

Increase Other Income by Managing Leasable Space

Rama 2 Bang Bua Thong Chiang Mai Bangna Udon Thani Khon Kaen

18 Warehouse Area: Phetkasem

SG&A Expense

Key Changes

◼

Selling and administrative expenses for FY2019 decreased by THB 27.9 mm or down 1.5% YoY, which mainly driven by the decrease in marketing expenses that resulted from the company’s policy to increase marketing effectiveness, the decrease in allowance for doubtful account receivables, and the increase in operating efficiency. THB mm / % to revenues from sales and services

623 644 643 160 166 144 223 252 56 62 333 364 369 92 93 163 162 147 41 35 85 160 93 35 28 266 353 375 89 101

1,614 1,907 1,880 474 486 8.7% 10.3% 10.5% 10.7% 11.2%

2017 2018 2019 4Q2018 4Q2019

Selling Employee Expense Admin Employee Expense Depreciation and Amortization Delivery Expense Marketing Expense Others SG&A to Revenue from Sales and Services Allowance for bad debt (reverse) (6) 33 10 (2) (13)

19

20

Improving Marketing Effectiveness

The marketing expenses in 2019 saw a steady decrease from the prior year, due to company’s policy to increase marketing effectiveness by

◼ Focusing on digital marketing and advertising on

social media such as Facebook and Line over traditional channels.

◼ Creating multi-channel selling through offline and

• nline media such as Lazada and Shopee which is the
• nline marketplace leader in Thailand.

21

Improving Marketing Effectiveness Digital Channel

e-Marketplace

Dohome’s Social Admin Chat & Shop

Social Commerce

EBITDA and Net Profit

1,807 1,254 1,563 246 341 9.7% 6.8% 8.7% 5.5% 7.8% 2017 2018 2019 4Q2018 4Q2019 EBITDA EBITDA Margin

EBITDA

931 439 726 53 152 5.0% 2.4% 4.0% 1.2% 3.5% 2017 2018 2019 4Q2018 4Q2019 Net Profit Net Profit Margin

Net Profit

EPS (THB)

0.90 0.31 0.46 0.04 0.08 THB mm / % to total revenue THB mm / % to total revenue

22

Balance Sheet at a Glance

31 December 2018 31 December 2019 Assets

THB mm % THB mm %

Cash and Cash Equivalents 167.2 1.0 204.1 1.1 Accounts Receivable and Other Receivables 838.9 5.0 859.9 4.7 Inventory 6,260.2 37.5 7,048.2 38.8 Property, Plant and Equipment 8,890.7 53.3 9,705.3 53.5 Others 517.7 3.1 334.3 1.8 Total Assets 16,674.6 100.0 18,151.7 100.0 Liabilities Bank Overdrafts and Short-term Loan 6,577.0 39.4 5,731.7 31.6 Accounts Payable and Other Payables 2,128.1 12.8 2,488.2 13.7 Long-term Loan and Financial Lease Liabilities 3,048.2 18.3 3,339.1 18.4 Others 128.9 0.8 132.3 0.7 Total Liabilities 11,882.3 71.3 11,691.3 64.4 Shareholder’s Equity Issued and Paid-Up Capital 1,456.3 8.7 4,904.8 27.0 Retained Earnings 3,330.1 20.0 1,549.7 8.5 Others 6.0 0.0 6.0 0.0 Total Shareholder’s Equity 4,792.4 28.7 6,460.4 35.6 23

Key Financial Highlight

Financial Ratios

126 116 127 2017 2018 2019

Cash Cycle

L/E Current Ratio ROE Cash Cycle

156 147 159 2017 2018 2019 20 18 17 2017 2018 2019

Inventory Days AP Days AR Days

0.8 0.8 0.9 2017 2018 2019 3.1 2.5 1.8 2017 2018 2019 21.7% 9.2% 11.2% 2017 2018 2019 49 49 49 2017 2018 2019

24

Business Outlook

Existing: Large Future: Large (10 stores) New (3 stores) Ubon Ratchathani Q2/20: Surin Nakhon Ratchasima Q3/20: Map Ta Phut, Rayong Rangsit Q4/20: Bang Lamung, Chon Buri Khon Kaen Udonthani Rama II Bang Bua Thong Chiang Mai Bangna Phetkasem Existing: To Go Future: To Go (5 stores) New (6 stores) Makro Charansanitwong Jan/20: Tesco Lotus Bangna Makro Sathorn Q2/20: 5 Branches Big C Bang Phli Tesco Lotus Korat Pantip Ngamwongwan

Existing Branches and Future Branch Expansion

As of 31 December 2019

Chiang Mai Udonthani Khon Kaen Ubon Ratchathani Nakhon Ratchasima Bang Bua Thong Map Ta Phut, Rayong Bangna Rama 2 Rangsit Phetkasem Surin Bang Lamung, Chon Buri Thepharak

Dohome To Go Existing: 5 Stores

Large Store Branches

26

Ubon Ratchathani Branch

Location 37-47, Sri Mongkhon Road, Warin Chamrap Subdistrict, Warin Chamrap District, Ubon Ratchathani Province 34190 Opening December 1993 27

Ubon Ratchathani to get industrial estate

A partnership between Thai and Japanese companies plans to invest nearly THB 3 billion to build an industrial estate in Ubon Ratchathani, focusing on agriculture processing and biotechnology. Natawatana Lerdsurawitaya, managing director of Ubon Industry Co, announced a partnership with Kaigai Advisory Co, Wellness Life Project Thailand Co and Asian Dynamic Communication Co. The companies recently signed a memorandum of understanding to establish the Ubon Ratchathani Industrial Estate, which is expected to begin construction by 2020 and conclude in 2022. The estate is touted as a regional distribution centre connecting with Cambodia, Laos and Vietnam. The estate will also manufacture machinery for agriculture and other industries. Mr Natawatana said the establishment of the industrial estate is a product of collaboration among the four partners, aiming to serve as a model of how industry-led sustainable development derives from foreign direct investment, enhances the local economy, provides employment and creates valuable socio-economic transformation in the region. He said the project targets generating an economic impact of more than 20 billion baht and providing 20,000 jobs by 2022. Source: https://www.bangkokpost.com

Nakhon Ratchasima Branch

28

New Motorway Construction Linking Bangkok with Korat

A motorway from Bangkok to Nakhon Ratchasima will be constructed to lessen traffic congestion on the current Friendship and Phahonyothin highways during long holidays or weekends. It will be a 196 km long highway called Highway 6 and it is part of the 535 km long project motorway connecting Bangkok to Nong Khai, a northeast Thai province bordering Laos where it will connect with its ASEAN neighbors. The cost of this 196 km long motorway is estimated at THB 82.6 billion (USD 2.42 billion). Of this amount, THB 77.9 billion  is the construction cost and THB 6.6 billion is for the land expropriation cost. The motorway will be consisted of 2 sections with the first one covering 103 km from Bang Pa-in to Pak Chong and the other 93 km covers Pak Chong to Nakhon Ratchasima. This motorway project is one of the 20 mega infrastructure projects initiated by the government to boost economy and investment from 2015-2022. It is scheduled to be completed and open to service in 2020. Source: Thai PBS, Thailand Board of Investment Location 412 Moo 2, Ratchasima - Chokchai Road, Nong Bua Sala Subdistrict, Muang District, Nakhon Ratchasima Province 30000 Opening September 2007

Key Information

• Rama II Road is under construction to widen

both inbound and outbound road into eight lanes Location 88/8 Moo 2, Rama II Road, Chai Mongkol Subdistrict, Mueang District, Samut Sakhon Province 74000 Opening December 2014

Rama ll Branch

Samut Sakhon Industrial Estate

29

Key Information

• Short distance to the Bang Bua Thong

intersection between Highway No.9 and No.345. (completed in September 2019)

• Highway No. 345 and 340 was widen both

inbound and outbound road (completed in November 2019) Location 88 Moo 5 Outer Ring Road, Lahan Subdistrict, Bang Bua Thong District Nonthaburi Province 11110 Opening October 2015

Bang Bua Thong Branch

30

Key Information

• Super Highway Chiangmai – Lampang was

widen both inbound and outbound road into eight lanes (completed in October 2019) Location 88 Soi 8, Saraphi Subdistrict, Saraphi District, Chiang Mai Province 50140 Opening December 2015

Chiangmai Branch

31

Location 88/88 Village No. 11, Om Noi Subdistrict, Krathum Baen District Samut Sakhon Province 74130 Opening November 2019

Phetkasem Road

Key Performance ▪ Gross Profit Margin: 18% – 20% ▪ Positive EBITDA: approximately at THB 1.XX mm per month Key Information

• Rama II Road is under construction to widen

both inbound and outbound road into eight lanes

Phetkasem Branch

32

Utilization of ASRS System to Increase Inventory Management Efficiency

Automated Storage and Retrieval System (ASRS)

◼ Phetkasem branch ◼ Improvement in

inventory management efficiency through lower costs to store and retrieve inventory

◼ The company could

potentially consider installing the ASRS system at other large store format warehouse in the future

◼ Being installed at the

 Reduce required warehouse space  Reduce the number of warehouse staff  More efficient inventory management

Phetkasem Branch

33

Location 483 Moo 10, Nok Mueang Subdistrict, Mueang District, Surin Province 32000 Store Area 30,516 Sq.m. Construction Period 15 December 2019 – 31 May 2020

Surin Branch

34

Location Map Ta Phut Subdistrict, Mueang Rayong District, Rayong Construction Period 1 November 2019 – 31 July 2020 Business Opportunities EEC Infrastructure:

Map Ta Phut

Investment Value Completion Date High-speed rail which connects 3 airports THB 220 billion 2023 U-tapao aviation city and MRO center THB 300 billion 2023 3rd phase of the Map Ta Phut Seaport THB 55 billion 2025 The Pattaya-Map Ta Phut Motorway THB 14 billion 2020

Map Ta Phut (Rayong) Branch

35

Location Bang Lamung Subdistrict, Bang Lamung District, Chonburi Province Construction Period 1 February 2020 – 30 September 2020 Business Opportunities EEC Infrastructure:

3rd phase of the Laem Chabang Seaport

Investment Value Completion Date High-speed rail which connects 3 airports THB 220 billion 2023 U-tapao aviation city and MRO center THB 300 billion 2023 1st phase of the Laem Chabang Seaport (Port A) THB 0.5 billion 2020 2nd phase of the Laem Chabang Seaport (SRTO) THB 0.6 billion 2019 3rd phase of the Laem Chabang Seaport THB 110 billion 2025

Bang Lamung (Chonburi) Branch

36

Dohome plans to capture all strategic area in Eastern Thailand

Bang Lamung Map Ta Phut

Eastern Thailand

37

Eastern Thailand Outlook

38

1 2 3 4 6 5 Makro Charansanitwong Makro Sathorn Big C Bang Phli Tesco Lotus Korat Pantip Ngamwongwan Tesco Lotus Bangna-Trad

Key Information

• Adjusted product assortment to be more Household and Repair & Maintenance Service category
• Higher Gross Profit Margin than large store format

Dohome To Go 6 Branches

39

Dohome To Go – Cosmo Walk

Key Information

• The area is surrounded by a huge

community including accommodation, office building, IMPACT Exhibition and Convention Center, and educational institutes such as St. Francis Xavier School, Sukhothai Thammathirat Open University, and Silpakorn University City Campus (SUCC).

• Population in Muang Thong Thani is over

300,000 people and more than 30 million visitors / year.

Dohome Togo

Location Cosmo Bazaar Building, Popular 3 Rd, Banmai, Pak Kret District, Nonthaburi 11120 Opening Q2 / 2020 40

Q&A